Ace brand clothing H&M's "Fasting Sale"

M-type society "Blue Ocean": IKEA in fashion

On April 12th, 2008, it was unusually early this morning. Shanghai Huaihai Middle Road lined up long distances of tens of meters. No matter whether it was young or old, they were excited and excited to wait to enter the store to buy... ..., what makes people so crazy? There is no doubt that this is the world's cheap fashion trump card H&M's debut in mainland China. Those excited expressions are all telling you: It is not only a cheap fashion store, but also a folk fashion myth! It not only indicates a new round of shopping frenzy that will be triggered by the combination of low prices, but also shows H&M's determination and strategy to formally enter the Chinese market. They expect that in the near future, as they uphold the business philosophy of their Swedish hometown IKEA, Like the popularity of Scandinavian furniture in China, China’s young people’s wardrobe is quickly occupied by “variety, parity, and a small amount” of product rules.

Japan’s strategic management guru Da Qiang Yi believes that society has begun to transform into an M-shaped society. The so-called M-type society refers to the wealth of the rich in the digital world, the world’s wealth, and the rapid rise in wealth under the trend of globalization; on the other hand, with the redistribution of resources, the middle class has fallen into disrepair due to its loss of competitiveness. Lower middle class. The distribution of wealth in the entire society suddenly has a big gap in the middle. with Like the font, the whole world is divided into three pieces. The number of poor people on the left becomes more and the number of women on the right becomes more. The middle part appears "collapse." M-type society consumers begin to move in two directions. As a result, the consumer market is also shifting towards luxury and saving money. In the luxury model, consumers do not hesitate to purchase high-quality products and services that meet emotional needs. The increase in the consumption of luxury goods in China in recent years has highlighted the market demand as such consumers. Second, in the money-saving model, consumers are looking for low-priced goods as much as possible. Because of the pressure from economic pressure on another class in the M-type society, they prefer low-priced products, but at the same time they have a strong desire to purchase high-quality goods.

In the M-type society, consumer characteristics have changed significantly. The poorer the poor and the rich the richer, the M-type society has become an indisputable fact. Both consumers have different consumption characteristics:

1. The rich have expressed their status and wealth through some luxury goods. Their minority belonging to the society has also become a must-see for many businesses. Wharton’s research on “Fortune under the Tower of Gold” also shows that companies can also obtain more wealth from the majority of society.

2. The emotional needs of the collapsed middle class. In the face of increasingly fierce competition in the society, the middle class faces many social pressures such as mortgages, education, and medical care. In the absence of social resources, the middle class begins to decline as the bottom of society. They are highly educated and pursue a high quality of life. However, with the decline in income, luxury goods are already out of reach for them, and they are instead pursuing low-price, high-quality products.

3, under the gold tower contains huge wealth. At the other end of the M-shaped society, that is, most of the people, it contains the enormous wealth of future businesses. Nowadays, China, Brazil, Russia and India, which are known as the BRIC countries in the world, have become the growth points for new growth of the world's enterprises. These countries are either in a period of rapid economic development or in a period of economic recovery. Most of the people in these countries are at the other end of the M-type society. However, because of the large number of people, they have strong potential for consumption. This has become one of the prominent features of the M-type society.

H&M Fashion Group saw the social structure and consumer changes of the M-type society and sought to find such a balance point, creating a “cheap fashion” apparel brand positioning. Its use of luxurious and changeable fashion and quality combined with mass parity to achieve the same as McDonald's selling hamburgers as "fashion"; its through the designer to join, famous models, limited edition and other ways to enhance its high-end brand image, created a The new competition in the apparel industry is blue ocean. It achieved sales parity through rapid marketing methods such as OEM, centralized logistics, and shortened cycles.

The history of H&M can be traced back to 1947, when Vasteras, once a center of medieval culture and trade center, opened a clothing store called “Hennes” in Northern Europe and Sweden, with reasonable prices, fashion and quality. The costumes garnered customers; in 1968, Hennes took over the "Mauritz Widforss" store and changed its name to Hennes & Mquritz (H&M), which has been used since then. In 1974, after the family’s third-generation Steven Pearson “took the lead,” H&M began to expand aggressively, adding new product lines. The launch of cosmetics, youth wear and baby clothing continued to enrich the shelves, and the store also crossed Northern Europe. Entering the European countries such as the United Kingdom and Germany, the number has steadily increased. In 2000, H&M has grown to become the largest clothing retailer in Europe with more than 840 stores in 14 countries and opened its first flagship store in New York. In 2006, the number of H&M stores increased to 1 345 and distributed to 14 countries in Europe, America and Asia. The total sales increased to 80 billion U.S. dollars and the return on net assets was as high as 40.2%. In the globalized environment of the world, how does H&M maintain and enhance its competitiveness and enable its rapid growth?

Customer Value Innovation: Thinking out of the Box

Customers, this is undoubtedly the center of the entire enterprise. US marketing guru Philip Kotler believes that conventional innovations that solve problems logically in a highly competitive market are no longer applicable, but customer-based creative thinking has become increasingly large. The charm, it through innovative alternative ideas and product development can stimulate new markets and profit growth. Obviously, H&M is a great winner of "creative thinking."

"Providing popularity and quality at the best price" is the brand identity that was established after Steven Pearson joined the company. This position indicates that H&M should add fashionable elements and excellent quality besides its inherent low price. This seems to be incomprehensible to many people. How do we combine mass parity with luxury and changeable fashion? Does this mean "noble fall"? H&M notes that, in fact, no shopper does not like designing brand-name clothes that are fashionable and luxurious, but the vast majority of people have to wait until the clearance sale to “get in a timely manner.” Why can't we satisfy customers at the same time? Cheap and cheap demand? According to a professional agency Verdict Research survey, the average price of apparel has fallen by 34% since 1995, but the number of clothes purchased by women has doubled over the same period. This shows that consumers pay more attention to fashionable styles, buy more clothes, but wear fewer and fewer clothes. At the same time, the current consumer market is migrating to the extremes of “luxury” and “saving money”. In the “luxury” model, consumers are willing to pay high prices for products with high quality and personality characteristics that satisfy their emotional needs. Services; and in the "money-saving" model, consumers are looking for low-cost, high-quality products as much as possible. This "contradictory" demand is suggesting consumers' desire for "affordable fashion." H&M's brand characteristics precisely balance the "contradictory" demands of consumers. In Hong Kong's first H&M flagship store in Asia, the RMB 20-odd fashion earrings bracelet trinket, and 70-80 various types of alternative T-shirts. Two-hundred-dollar exquisite dresses, jackets, these buy really need not be soft, and, "mix and match is the key," the popular culture has made more and more people realize that H & M and luxury brands mix and match (combination and matching ) is a brilliant idea! In addition to valuing prices and fashion, H&M has a high demand for product quality. Products must have comprehensive testing and routine quality control, including: zippers, flammability, chemicals, buttons, dimensions, etc., and also require apparel production. The process does not add harmful substances and chemicals that harm the environment.

To a certain extent, H&M's business philosophy is very consistent with IKEA's philosophy of selling clothes, furniture, and pop culture in a fast, standard, and popular way. It sells fashion like McDonald's. It is this creed that has helped the company's success to ensure that the company still generates 50% of its net profit in 2003 when the industry is sluggish. This year, it also allowed the company's expansion rate to reach 75%. The highest point in history, H&M has since maintained an increase of 10% to 15% of its stores every year.

Gain "Fast Sell" Advantages: Rapidly Responsive Market Innovation

“Time is money, time is speed.” This is particularly important for the apparel industry. According to economists' analysis, a computer product depreciates by 0.1% per day on average, while a garment devaluates by an average of 0.7% per day. If it can be sold 10 days in advance, it will depreciate by 7% and the gross profit margin will increase. %. Therefore, once the garment enterprises have mastered the efficiency, they can grasp the market opportunities and capture fleeting opportunities for profit. This is exactly what H&M insists on.

Create trend VS imitation trend

"Be a fashion follower, not a creator," H&M said. As consumers' tastes change more and more quickly, H&M finds exactly what it takes to adapt to customers' needs. Therefore, the strategy they adopt is not to create a trend, but to be accurate when the fashion trend just emerges. Recognize and quickly launch the appropriate clothing styles to achieve the fastest use of the best ideas. H&M has usually started designing trends and fashion products a year ago by the Design and Purchasing Department. Every spring and summer fashion week held in major fashion cities around the world will send special attendees. In this way, it takes only three weeks to become a big fashion brand. While we are still racking our brains for a small dress, the general public is able to buy clothing that is obviously similar to Chanel's style at H&M's store at a cheap price. In addition to fashion week, street culture and film media are everywhere. All kinds of trade festivals and trend history are the source of H&M's inspiration. The trend information collected by the headquarters was analyzed by more than 100 designers and used as a blueprint for their design process. In addition, the help of high-performance information systems is also an effective tool for H&M. Once popular information is available, it can be transmitted to H&M headquarters through the system as quickly as possible, so that the design department can grasp the styles welcomed by customers in the shortest possible time. Bringing forward-looking trends to low-priced public consumers all over the world, of course, for the company itself, this can also greatly reduce the risk of producing garments that are not subject to customers' welcome and discount promotions.

Fun "OEM"

For the apparel industry, "new products seize the market" is a unique magic weapon. Therefore, in order to better improve the speed of new products to intervene in the market, reduce capital occupation and reduce the risk of expanding the market, OEM is an excellent choice. For the sake of efficiency and cost considerations, H&M abandoned its own business model very early and outsourced the entire production process to approximately 700 garment manufacturers worldwide. Sixty percent of the 700 manufacturers are located in Asia, nearly 40% are located in Europe, and the rest are located in other countries in the world. In fact, such an arrangement has a “purpose.” In general, fashion trends can be divided into three levels. The bottom level is the product with the highest demand among customers. The middle level represents the clothes that are popular in the current season, while the goods located in the upper level are Will reflect the latest fashion trends. In this way, H&M can work independently. Small and highly fashionable garments are mainly produced by European manufacturers, so that fashion styles can quickly reach major markets in Europe; while conventional styles of fashion and children's clothing are mainly produced in Asia. Not strong, shipping by water can reduce costs.

For better management, the distribution of H&M's production division is proportional to the distribution of producers. Of the 22 production divisions, 10 are in Asia, 10 are in Europe, and the remaining 2 are in Africa and Central America so that they can Convenient coordination of manufacturers in different regions. In addition, from 2002-2004 data show that in 2002, there were 900 manufacturers contracted with H&M and 21 production departments. In 2003, the number of contract manufacturers had been reduced to 750 or so, and the number of production departments remained at 21, by 2004, contract manufacturers further reduced to about 700, while the number of production departments increased to 22. Obviously, H&M is interested in reducing the number of manufacturers but is increasing the number of production departments. It can be seen that the purpose of H&M is that manufacturers are more expensive and more expensive. The additional production department can communicate with them more effectively, reduce the time of production processes, and ensure the control of product quality and rapid shipment capacity. As CEO Eriksson said: “We have many suppliers in Europe. Their cost is a bit high, but the delivery time is short, so that clothes are not easy to discount.”

Integrate and optimize supply chain and seek strategic fulcrum

Some people say that competition in the 21st century has shifted from product fight to competition in the supply chain. A successful company must be able to perform more interactively and coordinately at each node. H&M performed very well on this point. H&M focused its attention on the integration of information systems. Regardless of the connection between the programs themselves or programs, H&M relied heavily on established information communication technology systems (ICTs). What are ICTs? It refers to the application of a variety of communications software and equipment to provide a variety of applications and services, such as distance learning, remote operations, video conferencing, management information systems and inventory control. It can run through the entire supply chain to achieve the time required to compress each program, making the interface between programs more smooth.

H&M can bring two advantages with ICTs. The first is information. With the use of ICTs, H&M departments can share the sales records of each garment in each store. The design department can learn the preferences of customers based on this; the logistics department can promptly replenish hot products based on inventory information; the purchasing department can follow the sales records as soon as possible. It plans to increase the clothing styles that are welcomed by customers. These advantages can make decisions faster and more accurate, especially for the production of clothing styles, if you can not get timely information to increase production decisions, it is likely to delay the process of other links, even if the increase in production of the style may become It will be yellow tomorrow.

The second advantage is communication. Each link of the supply chain is closely intertwined. ICTs are linked to the communication of various departments and make communication more smooth. H&M's supply chain is a one-stop design. Each link includes the design department, purchasing department, production department, manufacturer, central warehouse, local distribution center and branches. The procedures involved include designing, placing orders, shipping, and regions. Diversion, quality inspection, cargo diversion, etc. The information transmission begins with each branch. The point-of-sale information system of the branch will transmit the collected sales records back to the ICTs platform of the headquarters via the ICTs terminal in real time for sharing by various departments. The design develops the product through customer preference information. The newly developed fashion design will be transmitted to the purchasing department. The purchasing department will deliver the design and the quantity to be produced to the production department, and release the other production increase orders according to the sales records of each branch. Since the production department and the manufacturer are located in different regions, the production departments of each region can communicate through ICTs. At the same time, the production department will quickly pass the relevant information to the manufacturer through ICTs so that the manufacturer can quickly learn about the production. Clothing styles can be prepared and purchased in advance. The finished product of the manufacturer will be classified by the logistics center. For the logistics center, the help of the ICTs will make it more efficient. According to statistics, in 2004, the average number of goods processed per day reached 1.64 million, even if the daily operation is 24 hours. Calculations, on average, also deal with the classification and delivery of nearly 70,000 items per hour. In addition, since all of the stores are self-operated, the data sharing between stores, stores, headquarters, and departments is more efficient and rapid, which further enhances the function of ICTs and enables H&M's supply chain system to be fully integrated and optimized.

Building Global "Fast Selling" Business Model: Diversified Enterprise Claims

The corporate diversification strategy was put forward by the famous “product-market” strategy master Ansoff in the 1950s. It refers to a kind of growth or expansion behavior that the company develops to a certain stage and seeks long-term development. It is the business model that H&M has been sticking to over the years.

"Multiple, Smaller" Product Diversification Strategies

To ensure a low inventory rate, high elimination rate and rapid fashion, we must follow a "variety, a small amount" of product strategy. H&M wants to attract customers' attention and keep the customer's attention, it is necessary to firmly follow the fashion trends, frequent updates and more choices. In terms of psychology, "multiple, small amounts" of strategies will cause consumers to "stress" in their hearts, because this method can create a scarcity, thereby attracting the attraction of customers' intangible purchases. The easier to get, the more you can stimulate people's desire to buy. For the same style of clothing, the retail store inventory is usually only a few pieces, perhaps because of your momentary hesitation, thus missed the opportunity to eventually have it, because what you see tomorrow may be to put a new shelf. This initial annoyance, in return for a decisive purchase speed when the customer revisits, has fostered a large number of loyal followers and preferences. Moreover, H&M's rich product line ranges from basic clothing to classic styles, to the cutting edge of fashion, from young people to teenagers, to children and pregnant women. It covers a wide range of fields and colors are very complete. All models are different. The colors can be selected, which makes their consumer groups even bigger.